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UK FTSE 100 (.FTSE) falls 0.9% as China virus fears hit miners & travel stocks

UK FTSE 100 (.FTSE) falls 0.9% as China virus fears hit miners & travel stocks

Fears of the economic impact from a coronavirus contagion in China grew today, sending the UK stock market down nearly 1%.

The FTSE 100 gave up 0.9% or 64 points to close at 7,507, its steepest grop in nearly two months.

The pound shed 0.3% against the dollar to $1.3104.

Miners and travel stocks dent FTSE 

11.33: The FTSE 100 has fallen into the red amid investor nerves over the scale of the coronavirus after Chinese authorities locked down Wuhan, the city at the centre of the outbreak. 

After a sharp drop in Asian shares overnight that left the Shanghai Composite at an eight-month low, European indices opened in the red. The FTSE 100 dropped 16 points, or 0.2%, to 7,556.

Miners, leisure and travel stocks all took a hit as China put Wuhan on lockdown to try and contain a greater spread of the flu-like virus which has so far killed 17 and infected nearly 600.

Investors have been risk averse over fears that coronavirus is a repeat of the severe acute respiratory syndrome (Sars) epidemic seen in the early 2000s, which hit Chinese economic growth by 1%. 

Travel groups took a trip downwards, with British Airways owner International Consolidated Airlines (IAG) losing 2.2% to trade at 619p per share and cruise operator Carnival (CCL) falling 1.7% to £35.

Fashion group Burberry (BRBY), which relies on China for a large percentage of sales, was also in the red, dropping 1.7% to £21.12. 

‘Traders are a little on the nervous side in light of the news that the coronavirus situation is getting worse,’ said David Madden, market analyst at CMC Markets UK. ‘Traders are cutting their exposure to stocks for fear the health crisis will spread.’

Tensions between the US and UK over prime minister Boris Johnson’s plans for a digital tax also weighed.

‘The market’s mood isn’t helped by the Trump administration’s apparent threat of a trade war with the UK over its plans for a digital tax on US online giants,’ said Russ Mould, investment director at AJ Bell. 

The biggest risers this morning were found on the Alternative Investment Market (AIM).

Blue Prism (PRSM) jumped 16.6% to £14.37 after the automation software provider reported an 83% surge in full-year revenues. 

Online fashion retailer ASOS (ASC) also brought good news, rising  2.7% to £31.04 after reporting strong Christmas trading and a record Black Friday. 

Hargreaves Lansdown analyst Sophie Lund-Yates said it ‘made it through the festive season without signalling a distress call’ and sales were better than expected. 

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 7,663.55.

The projected lower bound is: 7,358.96.

The projected closing price is: 7,511.25.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 18.5373. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 45.17. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 17 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -191.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 2 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 13 period(s) ago.

Rex Takasugi – TD Profile

FTSE 100 INDEX closed down -64.250 at 7,507.670. Volume was 6% below average (neutral) and Bollinger Bands were 55% narrower than normal.

Open     High      Low     Close     Volume___
7,571.9207,572.1307,503.1707,507.670 668,611,072
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 7,609.67 7,449.65 7,364.86
Volatility: 9 13 14
Volume: 623,151,360 675,794,240 713,579,008

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FTSE 100 INDEX is currently 1.9% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .FTSE at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .FTSE and have had this outlook for the last 24 periods.

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